Lease Instead of Financing Your New Vehicle?
New vehicle leasing has been around for a long time. More than 60 years, in fact. Why are there so many ads out there that show Lease prices first over Financing? Pretty easy, if you ask a Hollis Ford Sales & Leasing Consultant, you will be surprised to know that approximately 30% of Canadians Lease their New Cars Trucks and SUVs, instead of financing them. Why? Well, there are multiple reasons:
There is a reason that some of the wealthiest people in the world along with people in business lease their vehicles. They all seem to share the same beliefs and strongly agree to purchase items which appreciate and lease items which depreciate. Leasing makes more sense and with lower payments you don’t have to own a business or be wealthy to afford them. Hollis Ford has opened the door to Consumer Leasing.
Read on to learn more about leasing a car, truck or SUV from Hollis Ford and your responsibilities and benefits as a lessee so you can get the best deal on your next vehicle.
Vehicle Leasing Basics
Vehicle leasing is a contractual agreement allowing you to use a vehicle for a fixed period of time under specified terms rather than purchasing the vehicle. Stated another way, it is a financing arrangement in which you make monthly payments, and maintain the vehicle until the lease period ends at which point your return the vehicle to the lessor. Also you could easily purchase your leased vehicle for the pre-determined “buyout” at the end of lease if you really love it.
Vehicle leasing has become very attractive to consumers since it is a more affordable method of vehicle financing than purchasing. It allows you the luxury of always driving late model, newer vehicles rather than owning one vehicle until it is old and worn out. Roughly 30% of the new vehicles sold to Canadians are leased cars, trucks and SUVs.
Monthly payments for vehicle leasing are generally lower compared to traditional auto loans and the monthly term is shorter.
Your Responsibilities As A Lessee
Once you’ve determined you wish to lease your vehicle, it’s important to understand your responsibilities. You must:
• Make monthly payments for using the vehicle during the lease period.
• Agree to maintain the vehicle as specified in your lease contract.
• Pay license fees and taxes while keeping your car insurance up-to-date.
• Return the vehicle in a condition that is specified in your agreement at the end of the lease term. Your Hollis Ford Leasing Consultant may be able to provide you with other options at lease end that could make your next lease or purchase even more appealing.
• Agree to pay additional charges in case of damage and other incidentals that are stipulated in your lease agreement. Ford offer a program called “Lease Care” which will protect you from excess wear and tear during the lease. This program is ideal if the vehicle will be used for commercial purposes.
Benefits of Car Leasing
With these responsibilities in mind, let’s consider the benefits of leasing your next vehicle:
• No down payment – The greatest benefit of vehicle leasing is it doesn’t require a huge down payment. As a matter of fact, most of Hollis Ford leases do not require a down payment at all. The saved money can then be invested for capital growth.
• Lower sales tax – When you consider leasing, there are some tax advantages. For example, when you purchase and finance a new vehicle, sales tax is due immediately and is calculated on the full purchase price of the vehicle; meaning if you finance your purchase, you are financing the tax as well, paying interest on the tax! When you lease the sales tax is spread throughout the lease term since tax payments are only calculated on your monthly payment.
• Drive a nicer car for your money – Since leasing typically comes with low monthly payments, you will get the chance to drive a newer, better equipped, higher end vehicle.
• Get new vehicles more often – It is easier to change vehicles at the end of the lease term. You don’t have to worry about the sales value and disposal of your old car. No muss, no fuss. Very convenient.
• Get excellent warranty coverage – If there is ever a problem with your car or things break down it is usually covered under the manufacturer’s warranty.
The Downside of Car Leasing
Is there really a downside? We will show you an upside to just about every preconceived downside.
• No ownership – When the lease term expires, you return the car. You’re essentially a renter and never own anything or build equity… But, do you really own your vehicle when you finance it at the bank anyway? In most cases, consumers who purchase and finance their vehicle generally trade their vehicle before their bank loan reaches maturity, then finance a new one. Generally in cases like their payout is greater than their vehicle is worth; creating negative equity. What happened the? They roll that negative equity into the next loan which will create higher payments. Most bank payments on purchases are over a 60- 96 month term! That is 5 to 8 years driving the same vehicle whereas most leases are 2 to 4 years!
• Less risk to your financial wellbeing – As explained above, if you do decided to purchase a vehicle over 60-96 months and you need to trade that vehicle a few years into your contract you may have negative equity. When leasing, you are always in a great position after the shorter 24-48 month term, assuming you have fulfilled your end of the lease agreement.
• Gap Insurance – In case of an accident Ford will provide Gap Insurance on a lease which will lower your financial exposure.
• Peace of Mind – Your lease may come with programs that will protect you and your loved ones in the unlikely event of well… your death. We don’t like thinking about it but if and when you pass away a leased vehicle may leave you loved one and estate with additional options financing may not have provide them with.
• Damage penalties and excess kilometers – At the end of your lease term, if any unrepaired accident the damage must be addressed. There could be an excess kilometer penalty if you did not calculate your kilometer allowance to the appropriate amount. If you drive a lot of kilometers Hollis Ford can calculate a custom payment based upon your kilometer needs. Discuss your kilometer options with your lease specialist prior to entering into your lease agreement.
How To Make Sure A Vehicle Lease Is The Best Deal
Leasing your next vehicle may be the best deal depending on your situation and needs. Here are some factors to keep in mind.
• Transportation or ego – If your vehicle is more than just practical transportation – (i.e.) you place a high value on driving the latest, coolest car or truck – then leasing can make sense.
• Low Kilometers – If you don’t drive a lot – usually less than 16,000 kilometers per year – then leasing can make sense.
• Average or High Kilometers – Most of the Hollis Ford lessees select our Average Kilometer Plan however, we can tailor your plan based upon your kilometer needs.
• Shop First – When shopping for your vehicle select which vehicle should meet your needs. No need to determine if you plan to purchase or lease at this point. We will give you both options once you select your vehicle. The lease will be based on the purchase price of the vehicle.
Hollis Ford have been in the vehicle leasing business for over 40 years, so we are experts in the leasing business. We want to make you comfortable in your decision process. Our Vehicle Consultants are well versed on the benefits of are and truck leasing and show you how to lower your monthly payment. Whether you lease, finance or outright purchase a vehicle from Hollis Ford, our main goal is to assist you along the way. In the end we wish to have a trusting working relationship and being your auto dealer for life.
*See a Hollis Ford Sales & Leasing Consultant regarding any questions you may have and full details on our various leasing plans.